The NYSE-listed company, based in northern China's Heilonjiang province, said that revenue increased 72 per cent to $26.1 million in the three months compared to $15.1 million in the second quarter of 2005.
"The increased popularity of the Feihe brand in mainland China continued to drive revenue growth," said the firm in a statement.
Producers of infant formula are benefiting from rapidly growing demand in China as parents with rising incomes look for the best nutritional options for their only children. Branded products are also faring well in the wake of a major safety scandal involving fake formula.
American Dairy said this week that it sold 53 per cent more product in this year's second quarter, or 6.1 million kilograms, with much of the higher sales coming from milk powder with nucleotides (up 168 per cent on last year's same quarter) and rice powder (up 89 per cent).
Operating profits also improved, partly thanks to a new processing facility for whey that allows the company to process all whey products in-house. Previously, it had to purchase processed whey from other providers in China.
Gross profit increased to $13.2 million from $7.5 million in the second quarter of 2005 and gross margin is now up to 50.7 per cent compared to 49.9 per cent in the prior year's period.
The firm continues to benefit from VAT rebates from Heilongjiang province, given out as an economic incentive. Rebates worth $1.2 million boosted net profits to $5.3 million from $2.8 million in the second quarter of 2005.
American Dairy said it would stand by previously announced guidance for the year, with expected revenue of $120 million, up 76 per cent on 2005, and net income of $20 million, up from $11.6 million in 2005.
The forecast takes into account increased demand for the company's products in the seasonally strong fourth quarter, continued marketing and advertising expenditure in the second half and further VAT rebates.
American Dairy chief Leng You Bin explained that the timing and amount of the government support is "discretionary", although "it is tied to our sales volume by product category".
